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What is
the Equity Builder Program?
Why
should a member use the EBP?
How can
members use the EBP?
Can
a member sell its mortgages to EBP-assisted buyers to
the Bank through the MPF program?
Is
the EBP available to organizations other than member financial
institutions?
How does
a member participate?
What is
the application period?
Who is eligible
to receive an EBP grant?
What
is the maximum grant amount that may be awarded to eligible
borrowers?
What
are the eligible uses of EBP funds?
What
types of properties are eligible?
What are
the home buyer's requirements?
Where
can I find information on financial literacy training?
How
much in EBP funds are available to a member?
How are EBP
funds allocated?
What
are the requirements for the home-buyer counseling?
Can
EBP funds be used with other programs providing assistance
to first-time home buyers?
What
is EBP's retention period and requirements?
What is the Equity Builder Program?
The Federal Home Loan Bank of Boston's Equity
Builder Program (EBP) provides down-payment, closing-cost, and rehabilitation assistance for an owner-occupied unit for home-buying households earning less than 80 percent of the area median income. The program is funded by a percentage of the Bank's annual Affordable
Housing Program (AHP). Through the EBP, grants are made to eligible borrowers when they close on mortgages through participating member financial institutions.
Why should a member use the EBP?
The EBP is a streamlined way for the Bank to support the residential-lending
activities of member
financial institutions. The program works in conjunction
with members' existing mortgage programs to expand homeownership
opportunities for households with incomes less than 80 percent
of the area median income. The EBP increases members' loan
volume by assisting home buyers who are able to qualify for
a mortgage but lack sufficient funds for the down payment
or closing costs.
How can members use the EBP?
Members can provide EBP funds to home buyers as a straight
pass-through at mortgage closing. Members can also use the
EBP to create an Individual Development Account (IDA) or similar
matched-savings program in which the EBP grant matches a home
buyer's savings in a ratio of at least a dollar saved in a
special account for every predetermined dollar amount granted
by the Bank.
Can
a member sell its mortgages to EBP-assisted buyers to the
Bank through the Mortgage Partnership Finance® (MPF®)
program?
Yes. Mortgage loans originated with EBP grants may be sold
by the member through the Bank's MPF
program, provided that the mortgages and home owners continue
to meet the retention requirements of the EBP. Members must
be approved as participating financial institutions (PFIs).
Contact the Bank's MPF
staff for more information.
Is the EBP available to organizations
other than member financial institutions?
No. Only members
holding stock in the Federal Home Loan Bank of Boston may
submit applications for EBP funds.
How
does a member participate?
Any member institution in good standing with the Federal Home Loan Bank of Boston can participate in the program. During the application period (usually March of each year), members complete an online application through the Apply section or through FHLB Direct, the Bank's online account-information and transaction service. A user ID and password are required.
Once approved to participate in the EBP, members then sign
an award letter and program agreement outlining the terms
and conditions of the EBP.
After determining that a home buyer is income-qualified for
an EBP grant by using the Bank's income-calculator worksheet
and guidelines, the member enrolls the buyer and reserves
EBP funds online, submitting copies of the income documentation.
The Bank's HCI staff will review and approve the home buyer's
income and enrollment.
The member then ensures that each borrower successfully completes
an approved home-buyer-counseling program. The program must
include pre- and post-purchase counseling as well as a financial
literacy component alerting borrowers to the characteristics
of predatory lending.
The member then originates the first mortgage, which includes
financial or other incentives, as well as the Bank's provided
standard mortgage and note with appropriate retention language.
At closing, the member provides the grant funds to the borrower
and requests reimbursement from the Bank. The Bank reimburses
members within 10 business days of receiving the reimbursement
request and the required documentation.
What is the application period?
This year, applications can be submitted beginning on July 6, 2009. All applications are due on July 24, 2009.
Who is eligible to receive an EBP grant?
Households earning no more than 80 percent of the median income for the area in which they will reside are eligible for a grant. Home buyers must complete a home-buyer-counseling course administered by an experienced homeownership counseling agency. The course must include pre- and post-purchase counseling and a component on financial literacy, alerting buyers to the characteristics of predatory lending.
What is the maximum grant amount that
may be awarded to eligible borrowers?
The maximum grant amount is $10,000 per property. EBP funds may not be used in conjunction with other AHP subsidies for the same borrower in the same transaction.
What are the eligible uses of EBP funds?
EBP funds can be used for down-payment assistance, customary
closing costs, home-buyer-counseling costs not covered by
another funding source, or rehabilitation costs associated
with acquisition.
EBP funds cannot be used for or to create a reserve for principal, interest, taxes, and insurance; to prepay life-insurance premiums; to reimburse home buyers for earnest deposits; to supplement other AHP subsidies for the same borrower in the same transaction; or to return cash to home buyers at closing in excess of $250. Also, EBP cannot be used for refinancing.
What
types of properties are eligible?
Eligible properties, including foreclosed properties, are owner-occupied housing, comprised of single-family, one- to four-family properties, town homes, duplexes, cooperatives, and condominiums. The property must be the borrower's primary residence. Mobile homes must be anchored to the ground and also meet HUD and/or Fannie Mae guidelines. A mortgage lender that offers mortgage financing for the purchase of a mobile home must ensure that the mobile home is located on property owned by the homebuyer. Other types of housing may be considered.
What are the home buyer's requirements?
Home buyers must earn no more than 80 percent of the median
income (adjusted for family size) of the area in which they
will reside. They also must complete a home-buyer-counseling
program administered by the experienced, homeownership counseling
agency designated by the member.
In addition, buyers must agree to use the property as their
primary residence, sign a five-year retention recapture agreement
(Bank-provided soft-second mortgage and note), and obtain
first-mortgage financing through the member sponsoring the
application.
How much in EBP funds are available
to a member?
A member may have enrollment authority up to a maximum of $100,000. Home-buyer enrollments are approved on a first come, first-served basis until the lesser of either the enrollment authority or the pool for the round is exhausted. No funds are guaranteed. The 2009 pool will be initially capitalized with $1,000,000. All EBP funds must be disbursed within 24 months of approval. Extensions are granted at the discretion of the Bank.
What
are the requirements for the home-buyer counseling?
Members must use the services of an organization recognized
as an experienced home-buyer-counseling agency and certify
that each borrower has completed that agency's home-buyer-counseling
program.
To be eligible, a counseling program must be provided by
an organization experienced in providing home-buyer counseling
and education. It must include pre- and post-purchase counseling
as well as a component on financial literacy alerting the
buyer to the characteristics of predatory lending.
Where
can I find information on financial literacy training?
Information on financial literacy is available on the following
web sites:
Can
EBP funds be used with other programs providing assistance
to first-time or other home buyers?
Yes, EBP funds can be combined with other federal, state,
or local grants or loans, such as Community Development Block
Grant (CDBG) or HOME funds. However, the funds cannot
be used in concert with or to supplement other AHP subsidies
for the same borrower in the same transaction.
What is EBP's retention period and
requirements?
Grants are subject to a five-year retention agreement in
the form of the Bank-supplied mortgage and note (see the
Forms and Applications page) to ensure that properties are
retained as affordable housing.
Members must ensure that each unit purchased is subject to
these documents, requiring that:
- The Bank is given notice of any sale or refinancing of
the unit occurring prior to the end of the five-year retention
period.
- In the case of a sale prior to the end of the five-year
retention period, an amount equal to the pro rata share
of the EBP subsidy that financed the unit — reduced
20 percent for every year the seller owned the unit —
shall be repaid to the Bank. Recaptured EBP funds are from
any net gain realized upon the sale of the unit after deduction
for sales expenses, unless the purchaser is a very low-
to moderate-income household, as defined by the Federal
Housing Finance Board and determined by the Bank.
- In case of a refinancing prior to the end of the five-year
retention period, an amount equal to the pro rata share
of the EBP subsidy that financed the unit — reduced
for 20 percent every year the occupying household has owned
the unit — shall be repaid to the Bank from any net
gain realized upon the refinancing, unless the unit continues
to be subject to a deed restriction or other legally enforceable
retention agreement or mechanism.
The obligation to repay the EBP grant to the Bank terminates
after any foreclosure. The retention agreement should include
the name of the home buyer, the address of the unit, and
the full amount of the grant, including any counseling paid
by the EBP.
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